Pennsylvania's solar program runs out of money

By Brent Burkey,
December 17, 2013 at 8:00 AM

Energy Systems & Installation Inc. recently completed a 1.2-megawatt installation in eastern Maryland. The Lebanon County-based company is doing most of its projects outside Pennsylvania and said the expiration of a state rebate program will hurt the industry in the commonwealth. - (Photo / Submitted)

Solar installation contractors based in the midstate have gotten the message.

The program was launched in 2009 to provide rebates to homeowners and small businesses to help cover costs of installing solar electric or solar hot water infrastructure.

After a "waiting list" phase of more than a year, the state reactivated the program earlier this year, thanks to about $7.25 million from the Commonwealth Financing Authority.

But as of last month, the money for the temporary reactivation has dried up.

In light of the finite nature of program funding, Lebanon County-based Energy Systems & Installation Inc. has been proactive. The company expanded to other states where it already does most of its projects, said Michael Drei, director of marketing.

The majority of its projects, and about half of its hiring, have been outside Pennsylvania, he said.

ESI also has offices in Connecticut, Maryland, Massachusetts, New Jersey and New York.

Without the expansion and amid the sunsetting of the Sunshine Solar Program, ESI would be just "a significant fraction of what we are today," Drei said.

ESI also has diversified its offerings as a turnkey energy solutions company. Solar is a big part of the business, but energy efficiency in general is becoming a significant part as well, he said.

The expiration of the program is going to hurt the solar business in Pennsylvania significantly, said Corey Wolff, ESI's CEO.

In other states, where ESI does about 90 percent of its projects, the cost of power is generally higher and makes solar installation more economical than in areas where power costs less, Wolff said.

However, the industry won't die off in Pennsylvania, he said.

People will still make the investment if they don't mind waiting longer for the system to pay for itself, Wolff said.

The absence of the state program contributes to a longer payback period of about 10 to 14 years compared with about five to eight years not that long ago, he said.

Paradise has had a good year in 2013 with projects in Pennsylvania, he said, in part because of the solar grant availability.

About 80 percent or more of the projects done from its Lancaster County operations were in Pennsylvania, with the remainder in other states, particularly Maryland, Beiler said.

"We've been blessed this year, and especially late in the year, with commercial projects," he said.

Paradise Energy Solutions decided to expand to other states to help ensure the business was stable and profitable and also has locations on Maryland's Eastern Shore as well as in Massachusetts, New York and Ohio, Beiler said.

"A lot of things are policy-driven," Beiler said. "As those incentives are, generally in most states, in some level of change at most times, it seems like there's always at least one of our locations that's really doing well, and that really helps the whole company as an aggregate."

He expects business to continue in Pennsylvania at a "slightly lower level" without the state's program. But the economics won't be as different as people might think, Beiler said.

Having to pay prevailing wage on projects hitting a $25,000 threshold was part of working through the state's program, he said, and now the savings from not having to follow the prevailing-wage mandate can be passed on to the customer.

Costs also have come down and the industry has matured, Beiler said.

"Solar panels in particular, what we pay today, is about one-third what we paid four or five years ago," he said.

The additional funding allocated for this year went to a mix of projects that already had been on the list for funding and new installations. The funds ran out last month, according to the state Department of Environmental Protection.

There are no plans at this time for more funding, DEP spokeswoman Lynda Rebarchak said.

All told, the state awarded about $113 million through the program's life, with about $100 million coming from a bond issuance authorized in 2008, Rebarchak said.

Additional money came from the Pennsylvania State Energy Program and the American Recovery and Reinvestment Act, she said.

Program reactivation

The Pennsylvania Sunshine Solar Program began in 2009 and went into a waiting-list phase in 2011 because demand exceeded the amount of money available.

The state temporarily reactivated the program for 2013 with $7.25 million to handle the backlog plus some new projects.

The Alternative Energy Investment Act required eligible applicants to select and work with an installer, approved by the Pennsylvania Department of Environmental Protection, that applied for the rebate for the homeowner or business, the agency said.

The amount available for homeowners was up to $7,500 for solar electric projects and up to $5,000 for solar hot water projects; businesses with 100 or fewer employees could get up to $52,500 for solar electric and up to $50,000 for solar hot water, DEP said.